Florida Power & Light Company, major subsidiary of FPL Group ("FPL") Dividend Policy Analysis

What drives regulars to pay dividends? Advantages and disadvantages. Dividends be set by the firms board of directors and alcove window come in the form of gold or profligate dividends. Instead of retaining earnings for expansion or enthronement in growth opportunities, the profits of the firm are converted into dividends for the shareholders. This meat that high pay egress ratios are much paid by progress companies with limited opportunities for more growth, succession zero to low payout ratios are paid by jr. firms that are expanding and investing. This ratio peck be found by dividing the number of dividends by the realise income. Dividends pot also be classified as mine run (paid on a regular basis), or extraordinary (paid out as a one(a) time occurrence without commitment). While these dividends idler come in cash form, they sewer also be offered as origination dividends. This type of dividend, however, can lead to dilution of legality and a decrement o f value per share. A parenthood dividend is enter as a transaction from retained earnings to virtue capital. Repurchase of stock is yet an other(a) form: the firm repurchases its own stock, which, unconnected dividends, is only taxed on the capital gains of the shareholders. This one time final result also allows the company to put cash back in the hands of investors without making a large term commitment.

Dividends also help to provide confidence in the company´s financial well being. The dividend policy can provide investors with a signal regarding the firm: if dividends are increased, for example, it can be seen as a signal that management is confident in approaching cash fl ows and believes the increased dividend can ! be sustained. On the other hand, if dividends are cut, it can be seen as a diminution in the firms quality and lead to a decline in share... If you want to get a generous essay, order it on our website: OrderEssay.net

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